While at SEL, Congressman Roskam toured the manufacturing facility and learned more about SEL and the products and services it provides for power systems around the world. The Congressman spoke with employees about tax reform and the company’s ESOP. The group also discussed manufacturing in America and the importance of immigration reform.

Congressman Roskam noted that “ESOPs are a huge success,” identifying retirement saving as a key element. “Companies thrive on predictability,” he said.

Dan Clifford, general manager of FISD, agreed, noting that “certainty for business is huge” and the lack of it over the past few years has been troubling.

His visit began in the 874 building where the company produces mainly ground support equipment for the airlines (crew and passenger stairs, baggage carts, and cargo dollies) viewing the different areas of production, meeting employees, and getting a feel for the products. The tour continued to the 862 manufacturing facility, which produces repair parts for the GSE, Conveyor and Military Divisions, again meeting employees along the way and seeing the newly renovated office area. At the 631 building, which produces specialized conveyor equipment, Congressman Peterson toured engineering and accounting.

A presentation was given in the Board Room on the importance of ESOPs and keeping them intact, especially through tax reform.

A few photos from the visit follow.

Senator Amy Klobuchar Visits Diversified Plastics

On September 20, 2013, Senator Amy Klobuchar (D-MN) held a press conference and toured the facilities of Diversified Plastics, Inc., an ESOP Association corporate member located in Brooklyn Park, MN. While on the tour Senator Klobuchar watched and talked with many employee owners as they showed her their part in completing the custom plastic injection molding jobs that Diversified Plastics runs each day.

Following the tour and prior to Senator Klobuchar holding her press conference on the shop floor, with the employee owners of Diversified Plastics behind her, Annette Lund (VP of Diversified Plastics) gave the history of Diversified Plastics. Started in 1977 with very little resources by Jim Dow, he and his employees expanded the business greatly over 34 years before he made the decision to begin looking at his retirement options. He had several good offers from competitors but it disturbed him that those who were interested in purchasing the company all wanted to close down the factory and move the machines to other plants. In that scenario, most, if not all, the employees would have lost their jobs. Ultimately he chose the route of keeping the business in the city where he started it and rewarded the employees who had been with him all those years by selling 100% of the company to the ESOP.

Following Annette’s comments, Senator Klobuchar began her press conference with local media members present to publicly show her support of ESOPs and pro-ESOP legislation, specifically S.742 – the Promotion and Expansion of Private Employee Ownership Act of 2013. The Senator stressed that ESOPs are a vital part of expanding the U.S. work force and keeping jobs local to communities such as what occurred at Diversified Plastics.

Steve Storkan, a member of The ESOP Association, followed Senator Klobuchar’s remarks by thanking her for her support and reminding all who were in attendance the power of employee ownership and how much better a company can be when employees own a piece of the rock. The morning ended with more discussion between the Senator and the employee owners with many of them thanking her for her support.

Employee Ownership Month (EOM) presents an excellent opportunity to tell your company’s ESOP story to anyone who will listen. Employee owners, elected officials, and members of the media are all potential audiences.

Remember, one size does not fit all. What may work for one company may not be the best idea for your company. Below is a list of ideas to help brainstorm ideas. Please feel free to include any events your company hosts, as well as, company activities that might be tailored for EOM.

Parties

Company picnics

Brown-bag lunches

Ribbon cutting ceremonies

Mock game shows

Theme days

Roundtable discussions with your local Chamber of Commerce or other local membership organizations such as the Rotary Club

Since the official start of Employee Ownership Month is just a few days away, we thought we’d highlight a company event that can be used during October to celebrate employee ownership at your company. Why not reach out to your ESOP company neighbors and share some ideas in October!

On August 15th, three Pennsylvania ESOP companies met to share information about the ESOP structure and ideas for building an employee ownership culture. Participating companies and ESOP Association members:

C.S. Davidson, York, PA (C.S. Davidson hosted the event)

Flinchbaugh Engineering, York, PA

Restek Corporation, Bellefonte, PA

According to Mike Shuey, an employee owner of Restek Corporation, “It was an excellent session and proved to be very valuable for all attendees.”

Today, we welcome David M. Davidson Jr., Chief Financial Officer of C.S. Davidson, Inc. located in York, Pennsylvania. C.S. Davidson is a member of The ESOP Association and will be celebrating 90 years in business this year. In this guest post, Mr. Davidson shares his thoughts on the value of employee ownership. Congratulations to C.S. Davidson on a successful 90 years.

In 1923, Carl Schaefer Davidson opened a modest surveying and engineering business in Hanover. He later moved to York and, in 1948, incorporated the business as C. S. Davidson, Inc. This is the story of a company that spanned three generations of the Davidson family, and continues to this day as an ESOP, or employee-owned, business.

Things were much more straightforward in the early years. There were no regulations to speak of, and zoning was a concept that had only recently been introduced in New York City. Engineers were hired for their imagination, creativity and ability to design. Calculations were done painstakingly by hand – our archives are filled with hand-lettered calculations and meticulously drafted diagrams that reflect the time that could be spent on the design of a project. Labor was cheap back then – old invoices show surveyors’ billing rates of less than a dollar an hour.

From the very beginning, C. S. Davidson, Inc. was very much a family-owned and family-operated business. Carl’s sons David and Bayard and I, his grandson, got our introduction to “engineering” by working on survey crews, cutting brush and carrying bundles of stakes. My father, David Sr., became president of the firm in 1965, and I in 1983.

At some point, every business owner has to deal with “ownership transition.” The options are limited: internal sale, external sale or closing the doors – although there are many variations within each option. We initially attempted a direct sale of stock to a limited number of employees. As is usually the case, the value of the business exceeded the financial resources and/or risk tolerance of the prospective purchasers. We could see that a straight cash sale would never accomplish the intended goal.

We have never considered a sale to an outside interest, although we receive many inquiries. Acquisition by another firm—no matter how similar in services and size—would inevitably lead to the loss of the culture that makes us uniquely “CSD.” Even though we’ve become a large firm (by local standards at least), we’ve managed to retain the feeling of a much smaller firm. We like that.

An ESOP (“Employee Stock Ownership Plan”) seemed to be the answer. Not only does it provide a mechanism to gradually transfer ownership to employees, it doesn’t require any investment (other than their continued hard work!) on their part. It has the added advantage of a tax-deferred sale (to the owners), a tax-deferred retirement benefit (to the employees) and a tax deduction (to the corporation).

In addition to the tax advantages, it has a less tangible (but in my opinion, more important) benefit of educating everyone to think like they’re an owner. It may seem an insignificant distinction, but as time goes on it is essential that the sense of ownership, as well as the actual ownership, changes hands. It’s the only way that CSD can expect to enjoy continued success for, hopefully, another 90 years.

All in all, an ESOP seemed like the right thing to do from a variety of perspectives. It was expensive, time-consuming and difficult – but in the long run it will be one of the best investments we’ve ever made.